A media report earlier this week suggested the provincial and federal governments had agreed to double the current $15-per-tonne levy on large industrial operations that fail to reduce emissions intensity by 12 per cent to a charge of $30 per tonne and reductions of 24 per cent.

The prospect of a “double-double” increase to the carbon levy on large emitters is being watched closely by the energy industry while governments work behind the scenes on a new climate change plan.

The Canadian Press reported this week that the Alberta and federal governments have reached a deal on new oil and gas regulations, which would see the current $15-per-tonne levy on large industrial operations that fail to reduce emissions intensity by 12 per cent doubled to a charge of $30 per tonne and reductions of 24 per cent.

The report suggested the agreement has been put on hold pending the selection of a new premier in the Progressive Conservative leadership vote in September, though the province maintains that “nothing has been decided.”

Ryan Kubik, president and chief executive of Canadian Oil Sands Ltd., said this week he’s heard the numbers but doesn’t have any inside knowledge of whether they’re accurate.

“We do anticipate we will see tighter carbon regulation, if you will, in Alberta. . . . The current regulations do impact on our operating costs. To give you a sense, it’s about 25, 30 cents per barrel for operating costs. With that increase, we do anticipate our operating costs are going to go higher,” he said.

“Do we welcome that? No. We do know the government is likely to bring it forward but I would say when we look at it we would encourage the government to take a holistic view on environmental issues and not just focus on them in silos.”

“Those types of numbers aren’t going to put us out of business, but they are going to reduce the competitiveness of the industry.”

The federal Conservative government has promised new greenhouse gas regulations for the oil and gas sector for years, and the Alberta government has said its own new climate change plan will only be released in conjunction with the federal rules.

Alberta’s current carbon levy plan expires in September, though the government may simply extend it until a new plan, and premier, are in place.

Environment Minister Robin Campbell was not made available to comment this week but his press secretary said numerous options — including adjusting targets and compliance costs — have been put under consideration.

“We have been talking to industry and other stakeholders about action on climate change for some time now. . . . At this point, nothing has been decided,” Kevin Zahara said in an email.

Wildrose Leader Danielle Smith said she’s been hearing a mixed reaction from the energy sector about the prospect of an increased levy.

“Members of the industry recognize that they need to make greater progress on reducing their environmental footprint,” she said.

“We are hearing from some that a doubling of the levy is not something that would be catastrophic to their operations. We are hearing from others it would be a hardship. So we are going to wait and see what the proposal actually is.”

University of Alberta energy economist Andrew Leach said that if the double-double levy increase is implemented, it will have only a small economic impact on oilsands producers, suggesting it could mean only a five to eight cent increase per barrel over the lifetime of a project

It also won’t put Canada on track to meet its commitment under the Copenhagen accord to reduce greenhouse gas emissions by 17 per cent from 2005 levels by 2020, he said.

“What are the investments that a company is going to be prepared to make under that new system that they wouldn’t have been prepared to make under the old system?” said Leach.

The climate impact of the oilsands has been a major factor in resistance in the United States to the proposed Keystone XL pipeline, which would run from northern Alberta to the U.S. Gulf Coast.

The PC government had previously floated the “40-40” idea, which would have required large industrial operations to cut their per-barrel emissions by 40 per cent over time, with a $40-per-tonne fee to companies exceeding those limits. That plan failed to gain traction with the energy industry or the federal government.

Michelle Rempel, the minister of state for Western Economic Diversification, said Friday she wasn’t aware of a double-double deal but she is hopeful the oil and gas plan will be released “in due course.”

The Calgary Centre-North MP told reporters that federal Environment Minister Leona Aglukkaq has been pushing to hit the “sweet spot” in the energy sector rules.

“We want to work with industry to make sure that the regulations that we have are tangible, so that we’re actually seeing a reduction in greenhouse gas emissions as well as not harming the economy. So, certainly that would be the goal of any agreement,” said Rempel.

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